One thing that's very important to
calculate is your market size and
For that we can use the TAM-SAM-SOM model.
That's where you define your model
in three different market sizes.
The TAM is the total addressable market,
that is if you could reach
every single consumer on the planet
to purchase your product.
The TAM is usually those huge market
numbers where you come in and
say that the market for this product
is about $3 billion worldwide.
That is true, if you could reach every
single consumer throughout the world.
SAM is the serviceable available market,
that's the market that is reachable
within the reach of your organization.
if your market is North America and
your market is small start-ups,
then your TAM becomes
substantially smaller but
also more realistic.
You go from saying 'there is a market
of $3 billion' to a serviceable
available market (SAM) of $300 million.
SOM is the serviceable obtainable market,
that is based on a practical
view of your organization.
Once again, if for example,
you build a market model and
you say in year one 'I'm going
to have three salespersons',
those three salespersons are not going
to go and grab a $3 billion market, and
they're not going to grab the $300 million
market that you initially estimated.
They might be able to bring you $3 million
or $2 million, so the SOM is the practical
approach of saying 'with the resources I
have, I am able to reach that market'.